This paper examines the impact of political competition on block grants from federal to sub-federal levels of government. We model the extent and direction of income redistribution as determined proximately by the political agendas of central decisionmakers and, at a deeper level, by the institutions within which they find themselves operating. We contrast two institutional frameworks that give way to differing political objective functions and, in turn, to strikingly different empirical predictions of the ways in which politics should affect fiscal policy. Lessons learned here may prove important in understanding limits on the types of redistribution possible via block grants, given the institutional framework, in both developing and developed countries.
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Paper provided by Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. in its series Working Papers with number
227.
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